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DreamWorks Animation CEO Jeffrey Katzenberg said Tuesday that layoffs already have begun and that 350 of the studio’s 2,200 employees will have been let go by year’s end.

“These things are very, very difficult to do,” Katzenberg told The Hollywood Reporter. “I would say it’s the hardest thing I’ve had to do since we started DreamWorks. We’ve never had to lay anybody off. It was against our culture. But it’s the right thing for us today, and it makes DWA strong going forward.”

Katzenberg said the restructuring was necessary given the disappointing results of Rise of the Guardian and the pulling of Me and My Shadow off the schedule and back into development. Those moves and a few more caused the company to take a $165 million charge, the company said earlier Tuesday.

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DWA had been debt free for years. DWA recently took-on $200 million in debt. That was a good move because with the China expansion and the Russian in-door theme parks, DWA is going to need lots of money -- but also appears to not need its current employees as it expands its business interests. That's strange because their Web site still has audio that says they searched the world over for the best talent. Maybe all of DWA's new business ideas were formed because Q4's results were anticipated and not a surprise:

Impacting DreamWorks Animation's fourth quarter and full-year 2012 results is a charge of approximately $165 million, which includes a write-down of film costs for Rise of the Guardians in the amount of $87 million, charges totaling $54 million related to the Company's decision to return Me & My Shadow back to development, a write-off of a number of other development projects in the amount of $20 million and a charge of $4.6 million related to restructuring activities.

"While Rise of the Guardians did not achieve the level of box office success that we have come to expect from a DreamWorks Animation film, we have made several changes to our future slate that we believe will position us well for the next two years," said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation.

It does not help that the SEC is investigating the company for bribing Chinese officials...

I have looked at DWA many times over the years and have never invested in it (although I might have taken a small speculative interest once or twice). It is falls like this that make me cautious when considering investing in companies with such a limited revenue stream. Disney, with its vast diversification, can still stumble. But, a failure in one part of the company will probably not ripple through it entirely.

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